The iShares U.S. Pharmaceuticals ETF (IHE) has delivered standout returns in 2025, significantly outperforming the broader equity market. A powerful wave of innovation within the drugmaking sector, particularly in obesity treatments and immunology, has fueled this advance. The fund has climbed 29% year-to-date, eclipsing the S&P 500’s 16% gain over the same period.
A Sector Powered by Contrasting Performances
The ETF’s impressive run is largely attributable to its major holdings, though their individual contributions paint a varied picture.
Leading the charge is Eli Lilly (LLY), the fund’s primary growth engine. Shares of the company, which has at times reached a $1 trillion market capitalization, have surged 38% since the start of the year. This remarkable performance is anchored by the blockbuster success of its GLP-1 drug Tirzepatide, which generated $10.1 billion in revenue alone during the third quarter of 2025.
AbbVie (ABBV) is also posting robust results in the post-Humira era. The company reported a 9.1% increase in third-quarter revenue, driven by explosive growth from its immunology products Skyrizi and Rinvoq, which saw sales jump 46.8% and 35.3%, respectively. Management has issued an optimistic forecast for 2027.
Should investors sell immediately? Or is it worth buying iShares U.S. Pharmaceuticals ETF?
In stark contrast, Pfizer (PFE) has acted as a drag on the ETF’s performance. The firm is contending with stricter FDA regulations for its COVID-19 vaccine and the onset of patent expirations, a headwind expected to gain momentum from 2026 onward.
The Double-Edged Sword of Concentration
The IHE’s structure embodies both its strength and its risk. Its performance is highly concentrated, reliant on the continued market dominance of leaders in the GLP-1 and immunology spaces, such as Lilly and AbbVie, which are delivering double-digit growth. This focus has been the key to its market-beating returns but also introduces specific vulnerabilities should these front-runners stumble.
The industry is currently experiencing what analysts describe as an innovation “supercycle,” distinct from the tech-heavy rallies of prior years. Structural tailwinds, including an aging global population and recession-resistant demand for healthcare, are providing a supportive backdrop for valuations. Capturing this dynamic effectively, the iShares U.S. Pharmaceuticals ETF demonstrated accelerating momentum into the close of 2025, notching an 11% gain for the month.
Ad
iShares U.S. Pharmaceuticals ETF Stock: Buy or Sell?! New iShares U.S. Pharmaceuticals ETF Analysis from December 6 delivers the answer:
The latest iShares U.S. Pharmaceuticals ETF figures speak for themselves: Urgent action needed for iShares U.S. Pharmaceuticals ETF investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from December 6.
iShares U.S. Pharmaceuticals ETF: Buy or sell? Read more here...
